You Mean, We Won’t Be Rich Some Day?

What Eduardo Porter writes in today’s NY Times will disappoint many readers my age. He says that there will be much less money from our parents to inherit than we think.

“While some forecasters still hope that the vast pool of wealth accumulated by the generations born in the first half of last century will prop up the finances of their aging offspring, new statistics provide a starker picture.

Though hundreds of billions of dollars are being passed on every year, most elderly Americans can probably forget about passing on a financial lifeline to their children.

The latest numbers confirm that a vast majority of baby boomers cannot count on an inheritance to help them out of their jam. Even as the total pile of wealth passed down the generations has increased sharply, the inheritance received by a typical American has declined. The shift can be explained in part by demographics changes, but also by the changing nature of old age (life expectancy has increased) and retirement financing (rather, the lack of it).

Yes, big money is being passed down. According to the Fed data, the overall pie of inheritances has grown to nearly $200 billion annually — more than three times the amount that was passed down in the mid-1970’s, after accounting for inflation. Paul Schervish and John Havens of Boston College’s Center for Wealth and Philanthropy predict that by midcentury, $25 trillion will be passed from the old to their offspring.

But the typical American is seeing little of this wealth. Mr. Schervish and Mr. Havens found that most money would go to a few lucky heirs: 7 percent of the estates would account for half the aggregate bequests.